Banks Can Compute 36(1)(viia) on Total Income Including Capital Gains: ITAT Ahmedabad

Nutan Nagarik Sahakari Bank Ltd. Vs PCIT (ITAT Ahmedabad) Assessee, a cooperative bank, filed ROI declaring income of ₹17.15 crore. AO completed assessment u/s 143(3) r.w.s.144B accepting returned income. PCIT initiated revision u/s 263 on two issues: (i) deduction u/s 36(1)(viia) allowed by AO on “total income” including capital gains, & (ii) omission to apply s.14A for exempt interest of ₹2.64 crore from tax-free bonds. PCIT held AO failed to examine these issues & directed recomputation restricting 36(1)(viia) to business income only & to apply Rule 8D for 14A disallowan...